Senators Feinstein and Shelby Introduce
Identity Theft Prevention Act

September 4, 2001

Washington, DC - In an ongoing effort to protect Americans' privacy and curb identity theft, U.S. Senators Dianne Feinstein (D-California) and Richard Shelby (R-Alabama) today introduced bipartisan legislation to require banks and credit bureaus to take greater precautions against identity theft including blacking out numbers from individuals' credit card receipts.

The legislation, the Identity Theft Protection Act of 2001, is cosponsored by Senators Jon Corzine (D-New Jersey), Jon Kyl (R-Arizona) and Charles Grassley (R-Iowa).

"This bill will help ensure financial institutions take additional steps to protect our citizens from identity theft," Senator Feinstein said. "In this complex, information-driven society, banks and credit card companies are the custodians of our sensitive personal financial information and as such they have a responsibility to prevent thieves from using their services to harm others. These institutions simply must improve their methods to detect fraud."

"Identity theft is one of the fastest growing crimes in our country today, and, I believe, will only continue to escalate in the future," Senator Shelby said. "The legislation Senator Feinstein and I have introduced includes several small common-sense measures aimed at minimizing the occurrence of identity theft."

"Recent statistics on the growth of identity theft suggest we have no time to waste in protecting personal privacy," said Feinstein. "The Federal Bureau of Investigation estimates 350,000 cases of identity theft occur each year, or one case every two minutes."

The Identity Theft Prevention Act of 2001 would:

-Require all new credit-card machines to truncate any credit card number printed on a customer receipt. Thus, when a store gives customers a receipt from a credit card purchase, only the last five digits of the credit card number will show. This prevents identity thieves from stealing card numbers off of discarded receipts.

Also, existing machines must be reprogrammed to truncate credit card numbers on receipts by 2006. Given that most credit machines have a working-life of approximately five years, this reprogramming requirement will put a minimal burden on businesses.

-Require credit bureaus to alert credit issuers of discrepancies between the consumer's address in the bureau's records and the address in the consumer's application for credit. Thus, credit card issuers will be alerted to possible fraud.

-Require credit card companies to notify consumers when an additional credit card is requested on an existing credit account within 30 days of an address change application.

-Codify the industry practice of placing fraud alerts on a consumer's credit file and gives the Federal Trade Commission the authority to impose fines against credit issuers that ignore the alert. Today, too many credit card issuers are granting new cards without adequately verifying the identity of the applicant. This provision will put some teeth into fraud alerts in order to curb the irresponsible granting of credit.

-Direct the Federal Trade Commission to improve information sharing among credit bureaus when citizens report fraud.

In June, Senator Feinstein introduced comprehensive legislation to set a national standard for protection of personal information, including Social Security numbers, driver's licenses and health and financial data.

The legislation, currently pending before the Senate Judiciary Committee, sets up a clear, two-tiered system of protection for all personal information. First, for the most sensitive personal information such as Social Security numbers, driver's licenses, and financial and health data, companies must get an individual's explicit permission prior to the sale of this information to third parties. This provision is also known as 'opt-in.' Secondly, for non-sensitive personal information such as addresses, companies must give individuals an opportunity to withhold their information if they so choose. This provision is also known as 'opt-out.

In addition, the legislation protects privacy without burdening commerce. Businesses will still be able to share Social Security numbers with the businesses for commercial purposes. For financial and non-sensitive information, businesses such as banks are permitted to share this information with their affiliates. Finally, for driver's licenses and health data, the legislation expands the opt-in requirements of current law.

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